State-owned refiner Kuwait National Petroleum (KNPC) has secured $3.98bn financing from local banks to fund the development of $16bn Clean Fuels Project.

The Clean Fuels Project involves the modernization and integration of the Mina Abdulla (MAB) and Mina Al Ahmadi (MAA) refineries.

During the signing ceremony, KNPC chairman Jamal al-Noori said that the first tranche of financing for ten years is led by National Bank of Kuwait and Kuwait Finance House.

The project is aimed at increasing the combined capacity of the refineries from the existing 736,000 barrels per day to 800,000 barrels per day, while reducing the sulphur content of petroleum products to 5%.

KNPC acting CEO Ahmad al-Jimaz said that the second tranche of the loan, which is expected to be $6bn, is likely to be arranged by international lenders and is slated to close by the end of this year.

The two tranches of the loan is expected to account for 70% of the total funding required for the project. The remaining 30% of the funding will be provided by KNPC from its own funds.

Scheduled to be completed in mid-2018, the project will be executed under three separate contract packages which include one at MAA and two at MAB.

Reuters cited NBK CEO Isam al-Sager as saying that NBK’s share in the first trench of financing is $1.32bn and that of Kuwait Finance House is worth nearly $910m.